A leaked report prepared for General Motors Holden suggests that it could cease Australian production by 2016, according to the AFR:
The briefing by University of Adelaide Professor Goran Roos reportedly concluded that “it is therefore likely that vehicle assembly will eventually cease: 2016 being the earliest likely date” although a shutdown in 2018 and 2022 were also indicated as possible…
[South Australian Premier] Mr Weatherill said the car industry was responsible for 13,000 jobs in the state and the loss of the sector was be a huge blow.
“An economy like ours, especially at a time like this, cannot consume a shock of that short,” he said
“If you rip out one of the key components of our economy, which is our manufacturing element … you damage the South Australian economy in a very important way…
“If Holden were to close, then the (parts) supply chain would start to fail and this, in turn, may well lead to Toyota ceasing Australian operations,” the report said…
Toyota is seeking similar assurances to be made in 2014 when decisions have to made on whether it will invest in a new model Camry beyond 2017.
Whether one supports taxpayer subsidies to the car industry or not, shuttering Australia’s biggest manufacturing industry at precisely the same time as mining investment is set to plunge would be an economic disaster that risks sending the economy into a tailspin.
The Federal Government may, therefore, be forced to keep the car industry on life support as it navigates the difficult path ahead, even if such subsidies are detrimental to longer-term allocative efficiency.
